Finance and accounting is one of the back-office processes that companies outsource, and the practice continues to thrive. As the market is growing, firms are discovering new ideas and looking for new answers to simplify F&A processes. Companies are trying to expand the outsourcing process into new areas of finance and accounting and new business segment.
A large number of small business owners believe that accounting tasks must be done in-house. Apart from the cost of outsourcing accounting process, the entrepreneurs do not want to give the sensitive financial information to outsiders. Yet, they tend to forget that there are much more benefits gained in outsourcing than the cost they have to pay.
• Cost savings, improved figures
• Focus on the core business when your back office is being managed by the outsourcing service provider
• No stress to hire, train and deal with the staff as all this is managed by the outsourcing company
• Access to industry standard accounting practices as the service provider had experience working with many other firms
Apart from the benefits it is very important to choose which process needs to be outsourced or what accounting function needs to outsourced and what needs to be kept in-house. For e.g. Accounts payable and receivables, If you outsource merely one function, you limit your benefits. If you outsource both, the transaction component increases because the accountant can see when cash comes in and goes out. It helps the firm to make better benefit of cash on-hand and optimize domestic processes.”
Common accounting functions being outsourced
Accounts Receivable Management – The main objective of Account Receivable (AR) is that companies could get back their payments on time or in a shorter period of time, improve their collection rates and make sure quicker processing of invoices which in turn contributes to increasing the cash flow
Account Payable Management – Accounts payable focuses on amending the entire payment task by efficiently automating the methods of financial transaction management, document management, omission of duplicate payment and expenditure-related solutions
Bookkeeping – Bookkeeping helps to maintain the daunting work of the everyday business in an effective way. Bookkeeping services included task reporting, year-end tax projection, financial analysis and more
Bank Reconciliation – Bank reconciliation enable to find any difference and ensuring correct bookkeeping of the accounting transactions. Apart from that, it also helps organizations to cut down administrative and other expenses by keeping a track of it
Tax Services – The tax laws for the businesses keep changing. The business entrepreneurs should know how to adjust according to the new tax policies. Thus, it is imperative to hire an accounting service provider who takes care of it
Payroll – A lot of work is involved in payroll processing. Although there are many accounting software tools accessible, but many businesses do not know how to use it and that is when an outsourced accounting service can work
Budgets – Budgets are the tools that translate the management strategy into an asset. Budget projects the annual sales targets and helps to ensure that you are not over spending.
• Track progress
• Communicate the business strategy to your staff
• Create accountability for results within the organization
It is also important to choose the outsourcing service provider carefully to reap maximum benefits with the association. It is vital to know the work history, know client references to avoid any future problem.